One Cooperative with plans to enter into the interest-free credit provision landscape but has been restricted by a lack of funds is Ethio Saving & Credit Cooperative Society, formed with 76 members.
The Cooperative, which has a cap on loans of 800,000 Br, has managed to provide around six million Birr in credit to its members, mostly public sector employees who require financial assistance for unplanned purchases. Yoseph Ashenafi, the head secretariat of the Association, revealed that the demand for loans is far from being met even in a recently formed cooperative like Ethio, which has seen the number of beneficiaries grow to around 500 in a short while.
“We’re continuously adjusting,” he said.
The regulatory landscape of saving and credit cooperatives in Ethiopia has been largely conflated with the general guidelines and requirements in place for other Cooperatives, contributing to the suboptimal performance of the sector to its reach.
The evolution of cooperatives in Ethiopia reflects historical, political, and socio-economic changes. It has a historical backdrop, with traditional associations like Equb and Idir (rotating savings and credit association) being integral to the communities. However, the formal initiation occurred with Emperor Haile Selassie’s Farm Workers’ Cooperatives Decree in 1960. It marked the first step in establishing cooperatives within a structured framework.
During the subsequent Socialist regime, cooperatives gained aggressive endorsement. The previous regime had limited access to land ownership, but the new approach increased the types and numbers of cooperatives, introducing mandatory membership and production quotas. With the rise of the EPRDF regime, there was a shift toward universally accepted cooperative principles. This transition led to the establishment of the Federal Cooperative Commission (FCC), which has now evolved into the Ethiopian Cooperative Commission (ECC).
